Children who experience rejection by their peer group exhibit concurrent behavioral, psychological, and academic problems and are at heightened risk for a variety of later negative outcomes. However, the same level and pattern of negative outcomes are not equally likely for all rejected children and little is known about which children will develop which specific problem(s) in response to peer rejection. In other words, rejection has ben established as a powerful general predictor of psychopathology, but out ability to predict the development of specific forms of maladjustment associated with rejection is limited. Clarifying the processes or mechanisms underlying the link between rejection and the development of psychopathology is a key to the establishment of greater predictive specificity which, in turn, would increase our ability to accurately identify children in need of intervention services. Information concerning underlying processes is also an integral part of theory building and would foster the development of more effective prevention and intervention efforts. A potentially rich source of understanding how peer rejection and outcome are linked lies in the area of social cognition (i.e., perceptions of self in relation to others, interpretations of the social behavior of self and peers, and importance of peer relations to self). The proposed study will follow approximately 1200 third grade children for three years. The sample is expected to be evenly distributed across gender and ethnically diverse and to include a wide range of socioeconomic status. Administration of questionnaires by classroom will be used to assess peer-report to peer relations and behavior and self-report of social cognitive processing and internalizing problems. Teachers will be individually interviewed concerning the academic, social, and behavioral functioning of each child in their class. Parents will complete mailed questionnaires concerning their child's behavioral functioning and the quality and type of neighborhood friendships. School records will provide data on absenteeism, academic achievement, and use of special education services. Parallel data will be collected every 6 months for 3 years. Structural equation modeling and growth curve analysis will be the primary statistical methods used for analyzing the longitudinal data. This research design will permit examination of how patterns of change in peer relations and social cognition are related to patterns of change in symptomatology (e.g., escalating social withdrawal or aggression) over the three years as well as testing of the mediational role of social cognition. The primary aim of the proposed research is to investigate how social cognition and peer rejection function together in the development of specific externalizing, internalizing, and academic problems.